Application for 54 ec tax exemption bonds

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Kapil Tiwari (Querist)
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18 August 2012 My friend has to invest in long term capital gains tax exemption bonds(54 EC) of NHAI/ REC.Kindly suggest reliable agents/brokers within Mumbai who can assist and ensure correctness of the entire procedure of applying for the said bonds. Thanks.

CS, Deepak Pratap Singh

CS, Deepak Pratap Singh (Expert)
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18 August 2012 Dear Friend, According to the provisions of 54EC you can invest maximum of Rs. 50.00 Lakhs in one financial year in bonds.

A possible solution could be to use Sec 54 and Sec 54EC together. Admittedly, this would not be feasible for everyone —- but where the long-term capital gain is earned from sale of a residential house, exemption from tax payable is available if the capital gain is reinvested in another property. At the same time, nowhere does it say that both property and bonds cannot be invested in together. Therefore, if workable, a part of the capital gain may be invested in residential property and the balance, if any, may be invested in the bonds or vice versa, ensuring at all times that the bonds investment is limited to Rs50 lakh.